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Inaction and climate stabilization uncertainties lead to severe economic risks

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Abstract

Climate stabilization efforts must integrate the actions of many socio-economic sectors to be successful in meeting climate stabilization goals, such as limiting atmospheric carbon dioxide (CO2) concentration to be less than double the pre-industrial levels. Estimates of the costs and benefits of stabilization policies are often informed by Integrated Assessment Models (IAMs) of the climate and the economy. These IAMs are highly non-linear with many parameters that abstract globally integrated characteristics of environmental and socio-economic systems. Diagnostic analyses of IAMs can aid in identifying the interdependencies and parametric controls of modeled stabilization policies. Here we report a comprehensive variance-based sensitivity analysis of a doubled-CO2 stabilization policy scenario generated by the globally-aggregated Dynamic Integrated model of Climate and the Economy (DICE). We find that neglecting uncertainties considerably underestimates damage and mitigation costs associated with a doubled-CO2 stabilization goal. More than ninety percent of the states-of-the-world (SOWs) sampled in our analysis exceed the damages and abatement costs calculated for the reference case neglecting uncertainties (1.2 trillion 2005 USD, with worst case costs exceeding $60 trillion). We attribute the variance in these costs to uncertainties in the model parameters relating to climate sensitivity, global participation in abatement, and the cost of lower emission energy sources.

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Acknowledgements

This work was supported by the U.S. Department of Energy, Office of Science, Biological and Environmental Research Program, Integrated Assessment Program, Grant No. DE-SC0005171, with additional support from NSF through the Network for Sustainable Climate Risk Management (SCRiM) under NSF cooperative agreement GEO–1240507 and the Penn State Center for Climate Risk Management. The authors thank William Nordhaus for making the DICE model available, and Alex Libardoni, Chris Forest and Roman Olson for providing their empirical climate sensitivity estimates and advice on their use and interpretation. The DICE model and documentation were accessed on 2/5/2011 from http://nordhaus.econ.yale.edu. Current access to the DICE model is at http://www.econ.yale.edu/~nordhaus/homepage/index.html. The CDICE model code is at https://github.com/mpbutler/CDICE2007. Sobol’ sampling and sensitivity analysis code used in this study are from the MOEA Diagnostic Tool http://www.moeaframework.org. Any opinions, findings, and conclusions expressed in this work are those of the authors, and do not necessarily reflect the views of the National Science Foundation or the Department of Energy.

Author Contributions

All authors jointly designed the study. MPB conducted the experiment and wrote the first draft of the manuscript. All authors edited the manuscript.

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Author notes

  1. Martha P. Butler

    Present address: Department of Meteorology, The Pennsylvania State University, University Park, USA

Authors and Affiliations

  1. Department of Civil and Environmental Engineering, The Pennsylvania State University, University Park, PA, 16802, USA

    Martha P. Butler

  2. Department of Civil and Environmental Engineering, Cornell University, Ithaca, NY, 14853, USA

    Patrick M. Reed

  3. Department of Agricultural Economics, Sociology, and Education, The Pennsylvania State University, University Park, PA, 16802, USA

    Karen Fisher-Vanden

  4. Department of Geosciences, The Pennsylvania State University, University Park, PA, 16802, USA

    Klaus Keller

  5. Earth and Environment Systems Institute, The Pennsylvania State University, University Park, PA, 16802, USA

    Klaus Keller

  6. Department of Engineering and Public Policy, Carnegie Mellon University, Pittsburgh, PA, 15213, USA

    Klaus Keller

  7. Department of Civil Engineering, University of Bristol, University Walk, Bristol, BS8 1TR, UK

    Thorsten Wagener

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  1. Martha P. Butler
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Correspondence to Martha P. Butler.

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Butler, M.P., Reed, P.M., Fisher-Vanden, K. et al. Inaction and climate stabilization uncertainties lead to severe economic risks. Climatic Change 127, 463–474 (2014). https://doi.org/10.1007/s10584-014-1283-0

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